Short selling: What is it? And what does the ban mean?

30th August 2011

Short selling is a stock market device where investors hope to benefit from a falling share price. They sell shares they do not own known as "naked" shorting or, more often they "borrow" them for a fee from an investing institution.

They hope they can complete the circle by buying them back later on at a lower price. A successful short sell of a share could involve selling it at 100p and then buying it back at 80p (and usually immediately reselling it) to give a 20p profit.

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